Future, Bharti retail to merge

Published on May 05, 2015 01:48:13 AM

The board of directors of Future Retail (FRL) has approved the merger of Bharti Retail (BRL) during a meeting held on Monday. The proposed consolidation and realignment would be carried out between FRL and BRL, and their shareholders and creditors under the provisions of Companies Act, FRL said in a statement.

As part of the deal, retail infrastructure business of BRL will also be hived off from the company to be merged into FRL, it added. BRL will issue one equity share of `2 each for every share of `2 held in FRL in consideration of the merger of Future's retail business into it. On the other hand, FRL will issue one fully paid up equity share of `2 each to BRL shareholders for every share of `2 held in it in relation to the merger of the retail infrastructure business.

Bharti Group has been looking for a full-fledged retail play, keeping its options open for partnership with its erstwhile cash and carry partner Walmart. However, the two parted ways in 2013 with the American retail giant deciding to focus only on wholesale business in India amid restrictions over FDI in multi-brand retail. BRL runs over 210 Easyday stores across different formats in India, mostly concentrated in the northern region.

Future Group also has been making move to consolidate its business after selling majority stake in Pantaloons to Aditya Birla Retail in 2012. It has a chain under different formats, including hypermarkets under Big Bazaar and supermarkets under Food Bazaar brand. As part of the deal agreed between the two firms, BRL’s existing holders of optionally convertible debentures (OCDs) aggregating `250 crore will hold OCDs in BRL as well as FRL aggregating to the same amount.

"The shareholders and OCD holders of Bharti Group have agreed to share with the companies an upside on the realisation out of the shares of the two companies," the statement said. The equity shares of BRL issued to shareholders of FRL following the merger will be listed on stock exchanges, the statement said, adding that the merger deal would be subject to approval from necessary regulatory authorities.